Order Code RL32414

CRS Report for Congress
Received through the CRS Web

The Private Testing of Mad Cow Disease: Legal Issues

Updated October 3, 2006

Stephen R. Viña Legislative Attorney American Law Division

Congressional Research Service ˜ The Library of Congress

The Private Testing of Mad Cow Disease: Legal Issues
Summary
The positive identification of bovine spongiform encephalopathy or BSE, commonly known as “mad cow disease,” in a Washington State cow in December of 2003 sparked a number of reactions from the federal government, the meat industry, and close to forty countries world-wide. The U.S. Department of Agriculture (USDA), for example, launched an extensive BSE sampling and surveillance program designed to test more high-risk cattle with the assistance of designated state and university diagnostic laboratories across the country. USDA implemented the new program in June of 2004, and uses USDA-approved “rapid” immunologic test kits. Most countries, however, quickly banned the importation of United States beef following the announcement. In an effort to meet new consumer demand, some private slaughterers propose to test 100% of their cattle using USDA approved “rapid test” kits. For example, Creekstone Farms Premium Beef, a private specialty producer and processor of Black Angus Beef, sought approval from the USDA to conduct voluntary BSE rapid testing for all the cattle it processes in order to promote sales, especially exports. The USDA, however, rejected Creekstone’s request primarily because the test had only been licensed for animal health “surveillance” purposes and “the test as proposed by Creekstone would have implied a consumer safety aspect that is not scientifically warranted.” The USDA’s rejection of Creekstone’s request to privately test all of its cattle for BSE ignited a significant amount of debate and resulted in the filing of a lawsuit by Creekstone on March 23, 2006, against the USDA. At issue is whether the USDA’s decision to reject Creekstone’s request to test all of its animals for BSE was a valid agency action. This report examines the legal authority of the USDA’s Animal and Plant Health Protection Service to regulate all testing for BSE, particularly the voluntary testing of 100% of a private company’s animals with rapid test kits and the USDA’s recent rejection of Creekstone’s application to test all of the cattle it processes for BSE. This analysis encompasses some of the legal arguments that have or might be presented in the Creekstone lawsuit. This report does not discuss the possible role that the Food and Drug Administration may play in the regulation of BSE testing and surveillance. For information on the USDA and legislative activities relating to BSE, see CRS Report RL32199, Bovine Spongiform Encephalopathy (BSE, or “Mad Cow Disease”): Current and Proposed Safeguards, by Geoffrey S. Becker. This report will be updated as warranted.

Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 USDA Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Rapid Test Kits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Private Testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Arguments for the Inclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Arguments Against the Inclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 The Creekstone Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

The Private Testing of Mad Cow Disease: Legal Issues
Background
Historically, the federal government has assumed primary responsibility for the management and testing for foreign animal diseases1 like bovine spongiform encephalopathy or BSE, commonly known as “mad cow disease.” States and veterinarians have played a role in animal disease testing but usually with significant federal oversight. Following the first confirmed case of BSE in the United States, the U.S. Department of Agriculture (USDA) announced an enhanced BSE sampling and surveillance program designed to test more cattle in the targeted high-risk population with the assistance of designated state and university diagnostic laboratories across the country.2 The USDA’s enhanced surveillance plan also obtains a random sample of normal, but older animals at slaughter.3 USDA implemented the new program in June 2004, and uses USDA-approved “rapid” immunologic test kits. Rapid tests are designed to determine the presence of abnormal BSE-related proteins in sampled brain tissue within a few hours — a dramatic difference from the international “gold standard” test for BSE: the immunohistochemistry test, which can take up to two weeks. Since the implementation of the new testing program, a BSE-infected U.S.-born cow was identified in Texas in June 2005 and in Alabama in March 2006. In July 2006, the USDA announced that it would soon end enhanced testing and transition to an ongoing program that tests approximately 40,000 cattle yearly. Some countries, like Japan, saw USDA’s proposed sampling as inadequate and insisted that the United States test all of its cattle for the fatal disease at slaughter before it would allow the beef to enter its borders. Japan placed a ban on U.S. beef after the first case of BSE was diagnosed in Washington state in December of 2003, but announced in October 2004 that it would allow some U.S. beef to enter the
Foreign animal diseases are important transmissible livestock or poultry diseases believed to be absent from the United States that can have potentially significant health or economic impacts.
2 1

Through mid-March 2006, about 653,000 of these cattle had been tested. The targeted high-risk populations include cattle that are exhibiting central nervous system disorders, nonambulatory cattle (downers), and those that die on the farm of unknown causes. See USDA, Bovine Spongiform Encephalopathy (BSE) Surveillance Plan (March 15, 2004) available at [http://cofcs66.aphis.usda.gov/lpa/issues/bse/BSE_Surveil_Plan03-15-04.pdf]. Id. The BSE disease can take years to develop from exposure to clinical signs; consequently, it is argued that only older animals (i.e., animals approximately 30 months and older) are an appropriate population for BSE surveillance testing.

3

CRS-2 country under an interim trade program. The Japanese did not finalize a decision to permit U.S. imports until December 2005; however, U.S. imports were again halted by the Japanese on January 20, 2006, when vertebral column bones (backbone is a prohibited material there) were found in several boxes of veal shipped by a New York processor. U.S. beef imports, which once accounted for 25% to 30% of Japanese beef consumption, resumed July 27, 2006. Responding to and anticipating concerns of foreign governments and domestic consumers about potential contamination of the U.S. beef supply, Creekstone Farms Premium Beef — a private specialty producer and processor of Black Angus Beef — sought approval from the USDA to conduct voluntary BSE rapid testing for all the cattle it processes under a “marketing” program.4 On April 8, 2004, the USDA rejected Creekstone’s request stating that the test had been licensed only for animal health “surveillance” purposes and “the test as proposed by Creekstone would have implied a consumer safety aspect that is not scientifically warranted.”5 In a June 1, 2004, letter to Creekstone, the USDA also stated that “allowing a company to use a BSE test in a private marketing program is inconsistent with USDA’s mandate to ... maintain domestic and international confidence in U.S. cattle and beef products.”6 On March 23, 2006, Creekstone filed a lawsuit against the USDA seeking, among other things, an injunction enjoining USDA from implementing or enforcing any prohibition on Creekstone acquiring or using USDA-approved BSE rapid test kits for purposes of routinely screening for BSE-infected cattle.7 Creekstone filed a motion for summary judgment on July 15, 2006. The USDA responded and filed its own motion for summary judgment on September 22, 2006. In addition to responding to Creekstone’s claims, the USDA argued that the case should be dismissed as moot because Japan has reopened its markets to U.S. beef imports.8 The USDA’s rejection of Creekstone’s request to privately test all of its cattle for BSE with rapid test kits ignited a significant amount of debate among lawmakers and segments of the beef industry and ultimately resulted in the lawsuit discussed herein. At issue is whether the USDA’s decision to reject Creekstone’s request to

4

Japan, for example, represents 20% of Creekstone’s sales. Sally Schuff, Creekstone Farms debate centers on issue of marketing versus food safety, FEEDSTUFFS, April 19, 2004.

USDA Statement by Bill Hawks, Undersecretary for Marketing and Regulatory Programs Regarding a Request by Creekstone for Private BSE Testing, Release No. 0141.04 (April 9, 2004).
6

5

Creekstone Farms v. United States Dep’t of Agric., No 1:06-cv-00544-JR, at 11 (D.D.C., Mar. 23, 2006) [hereafter Creekstone Lawsuit].

Creekstone Lawsuit. According to the lawsuit, Creekstone has lost approximately $100 million because of its inability to sell to foreign markets. Id. at 8. On May 9, 2006, during the markup of the FY2007 USDA appropriation bill (H.R. 5384), the House Appropriations Committee rejected an amendment that would have permitted meatpackers to test their own cattle for BSE. Defendant’s Cross Motion for Summary Judgment and In Opposition to Plaintiff’s Motion for Summary Judgment, Creekstone Farms v. United States Dep’t of Agric., No 1:06-cv00544-JR (D.D.C., Sept. 22, 2006) [hereinafter USDA Response].
8

7

CRS-3 test all of its animals for BSE was a valid agency action. This report analyzes the legal authority of the USDA to regulate the voluntary testing of 100% of a private company’s animals with rapid test kits and the USDA’s rejection of Creekstone’s application to test for BSE all of the cattle it processes. This analysis examines some of the legal arguments that have or might be presented in the Creekstone lawsuit.

USDA Authority
The USDA cites the Viruses, Serums, Toxins, Antitoxins, and Analogous Products Act (21 U.S.C. §§151-159) (hereinafter VSTA) and its applicable regulations as the source of authority for its regulation of animal testing and, more particularly, the licensing of rapid test kits.9 The VSTA was originally enacted in 1913 primarily in response to substantial losses being suffered by American hog raisers from the unregulated manufacture and distribution of anti-hog cholera serum.10 The stated purpose of the VSTA in 1913 was to prevent:
the introduction into the United States of dangerous and worthless viruses, serums and analogous products for use in the treatment of domestic animals, some of which products may be the means of introducing disease not now known in the United States, and also for the purpose of controlling the use, by preventing the interstate shipment, of similar dangerous and worthless products that may be manufactured within the United States.11

The USDA found this legislation necessary “in order to protect the farmer and stock raiser from improperly made and prepared serums, toxins, and viruses.”12 Congress amended the VSTA in the Food Security Act of 1985 (P.L. 99-198, Tit. XVII, §1768) to (1) authorize the USDA to license and regulate intrastate movement of biological products, (2) broaden the Secretary’s authority to issue regulations “to carry out the Act,” (3) grant the agency enhanced enforcement powers, and (4) recognize a congressional finding that federal regulation was “necessary to prevent and eliminate burdens on commerce and to effectively regulate such commerce.”13 The legislative history supporting the 1985 VSTA amendments reflects a congressional understanding of the need for “national uniform standards” in the preparation and sale of biological products.14

Jon Ortiz, State looks to test beef: Lawmakers hope to soften foreign ban, SAC BEE (an Online Division of THE SACRAMENTO BEE), March 12, 2004, available at [http://www.sacbee.com/content/business/agriculture/story/8491741p-9420617c.html].
10 11 12

9

Hall v. State, 158 N.W. 362 (Neb. 1916). S.Rept. 62-1288 (1913) (3rd Sess.).

Hearing before the Committee on Agriculture on the Estimates of Appropriations for the Fiscal Year Ending June 30, 1914, (H.R. 28283) 62nd Cong. 24 (1913) (statement of Dr. A. M. Farrington, Asst. Chief Bureau of Animal Industry, Dept. of Agriculture).
13 14

See 21 U.S.C. §§151, 154, 159. S.REPT. 99-145 at 339 (1985).

CRS-4 Except as permitted in the act, the VSTA makes it unlawful for any person to prepare, sell, barter, or exchange anywhere in the U.S., or to ship or deliver in or from the U.S., any dangerous or harmful virus, serum, toxin, or analogous product intended for use in the treatment of domestic animals.15 The VSTA further requires that a person who prepares, sells, barters, exchanges, or ships any virus, serum, toxin, or analogous product do so in compliance with USDA regulations through an establishment holding an unsuspended and unrevoked USDA license.16 The VSTA authorizes the Secretary to issue, suspend, and revoke licenses for the maintenance of establishments that prepare viruses, serums, toxins, or analogous products for use in the treatment of domestic animals. Pursuant to 21 U.S.C. §152, the VSTA also prohibits the importation of any virus, serum, toxin, or analogous product except under a permit from the Secretary of Agriculture. The Secretary of Agriculture is also authorized to make and promulgate rules and regulations as may be necessary to prevent the preparation, sale, barter, exchange, or shipment of a dangerous virus, serum, toxin, or analogous product for use in the treatment of domestic animals or otherwise to carry out the VSTA. Pursuant to this authority, the USDA, through the Animal and Plant Health Protection Service (APHIS), has promulgated a comprehensive set of regulations governing the licensing of viruses, serums, toxins, or analogous products (See 9 C.F.R. subchapter E, pts. 101 to 124). Regulations for the VSTA broadly catagorize viruses, serums, toxins, or analogous products as “biological products” at any stage of production intended for use in the treatment of animals and which act primarily through the direct stimulation, supplementation, enhancement, or modulation of the immune system or immune response. A “biological product” includes but is not limited to:
vaccines, bacterins, allergens, antibodies, antitoxins, toxoids, immunostimulants, certain cytokines, antigenic or immunizing components of live organisms, and diagnostic components, that are of natural or synthetic origin, or that are derived from synthesizing or altering various substances or components of substances such as microorganisms, genes or genetic sequences, carbohydrates, proteins, antigens, allergens, or antibodies.17 (italics added)

“Treatment” under the regulations means the prevention, diagnosis, management, or cure of diseases of animals.18 “Prepare” or “preparation” is generally referred to as the manufacture or production of a biological product and has been defined as the steps and procedures used in the processing, testing, packaging, labeling, and storing of a biological product. With respect to licensing, the regulations require every person who “prepares” biological products subject to the VSTA to have a valid U.S. Veterinary Biologics Establishment License and at least

15 16 17 18

21 U.S.C. §151. Id. 9 C.F.R. §101.2. Id.

CRS-5 one valid U.S. Veterinary Biological Product License.19 A USDA permit is also required for every person importing a biological product.20 Although the VSTA explicitly addresses the preparation, sale, barter, exchange and shipment only, USDA regulations (discussed below) authorize “use” and “distribution” restrictions in the public interest or for the protection of animals.

Analysis
The USDA’s rejection of Creekstone’s request to privately test all of its cattle for BSE with rapid test kits has sparked a considerable amount of controversy. At issue is whether the USDA’s decision to reject Creekstone’s request to test all of its animals for BSE was a valid agency action. As such, we first examine how a rapid test kit might fall within APHIS’s regulatory purview. Next, we address APHIS’s purported authority over private companies intending to conduct voluntary rapid tests for BSE. Finally, we discuss the validity of the USDA’s decision in the Creekstone case.

Rapid Test Kits
In response to the need for an increase in BSE testing, the USDA and some private beef producers have developed plans to use BSE rapid test kits. In order for APHIS to regulate the proposed rapid test kits, however, it must be demonstrated that such tests fall within the regulatory purview of the federal agency — that is, “biological products” intended for use in the treatment of animals and that act primarily through the direct stimulation, supplementation, enhancement, or modulation of the immune system. The USDA has reportedly licensed at least four different companies’ rapid test kits.21 According to the lawsuit, Creekstone entered into discussions to purchase the rapid screening test produced by Bio-Rad, Inc. The Bio-Rad rapid test kit is an enzyme-linked immunosorbent assay (ELISA) designed for the rapid detection of the prion protein specific to BSE.22 The USDA argues that the rapid test kits may be regulated because they are “diagnostic” tests (a type of “biological product”) intended for use in “diagnosis” (a

19 20 21

Id. at §102.2. Id. at §104.1.

First BSE rapid tests approved for USDA surveillance plan, FEEDSTUFFS, March 29, 2004 (HerdCheck’s IDEXX BSE Antigen Test Kit & Bio-Rad’s TeSeE test); Prionics and Roche Gain Approval of Rapid BSE Tests for USDA, PR Newswire, April 8, 2004 (Prionics(R)Check Western and Prionics(R)-Check LIA (distributed by Roche Diagnostics)); Abbot Laboratories Receives Approval From U.S. Department of Agriculture for Rapid Enfer BSE Test, PR Newswire, April 7, 2004 (Abbot Laboratories’ Rapid Enfer BSE test).

For a discussion on the scientific testing mechanisms specific to the Bio-Rad and other rapid test kits, see ADVANCING PRION SCIENCE, GUIDANCE FOR THE NATIONAL PRION RESEARCH PROGRAM, 80-85 (Rick Erdtmann and Laura B. Sivitz, eds., The National Academies Press 2004).

22

CRS-6 type of “treatment”) of disease in cattle that act primarily through the direct stimulation, supplementation, enhancement, or modulation of the immune system.23 In addition, the USDA also argues that a rapid test kit, as a test prepared and intended to detect an animal disease, is an “analogous product.”24 “Analogous products” are considered “biological products” when, for example, the item in question at any stage of production or distribution is intended for use in the treatment of animals through the detection or measurement of antigens, antibodies, nucleic acids, or immunity.25 The USDA’s regulation and oversight of rapid test kits seems consistent with its overarching mission under the VSTA (and other laws) to protect U.S. public and agricultural health by assuring that biologics used in the treatment of animals are pure, safe, potent, and efficacious.26 Creekstone contends in its lawsuit that the BSE rapid test kits are not viruses, serums, toxins, or analogous products subject to regulation by the USDA. Creekstone argues that the BSE test kits are not used in the “treatment” of any animal because they are applied to tissue removed from dead cattle and do not act through the stimulation, supplementation, enhancement, or modulation of the immune system of any animal.27 Because Creekstone questions the USDA’s authority over the rapid test kits, the court will likely have to examine the chemical reactions and scientific mechanisms used by the rapid test kits in relation to the specifications listed in regulation and the VSTA. Although an analysis of the scientific testing procedures used by each rapid test kit is beyond the scope of this report, it still appears feasible to conclude that a rapid test kit is at least a biological product intended for use in the treatment of domestic animals.

Private Testing
As mentioned above, the USDA has reportedly only licensed rapid test kits for “surveillance” purposes. This limitation has restricted the ability of private entities to obtain kits. At the center of the debate is a proposal from Creekstone to privately test for BSE 100% of the cattle it processes. The tests, however, would be for reportedly “marketing” purposes rather than the USDA approved, “surveillance” purpose. The USDA claimed that Creekstone’s proposal had an implied consumer safety aspect that was not scientifically warranted and denied Creekstone’s request to use rapid test kits. We could not determine exactly which licenses or permits a private company intending to “use” BSE rapid test kits would need pursuant to

See USDA Response, at V. p. 34. Moreover, USDA’s approval of the rapid test kits as “surveillance” tools appears consistent with its regulatory definition of “treatment,” which includes the “diagnosis” and “management” of animals.
24 25 26

23

Id. 9 C.F.R. §101.2(2)(ii).

Viruses, Serums, and Toxins and Analogous Products; Restrictions on Distribution and Use, 57 Fed. Reg. 38758 (Aug. 27, 1992).
27

Creekstone Lawsuit, at 15.

CRS-7 federal regulations (see Creekstone discussion).28 The authority under which APHIS can regulate the actual “use” of a biological product seems to be less clearly defined than its authority over the actual preparation of a biological product. In determining whether an agency action is valid, a reviewing court examines the bounds of authority granted to the agency by Congress.29 In Chevron v. Natural Resources Defense Council, the Supreme Court established a two part test to assess the validity of an agency’s interpretation of an authorizing statute.30 First, the court will look to the statute itself and determine whether Congress has directly spoken to the question at issue. If it has so spoken and the intent of Congress is clear, both the court and the agency must give effect to the expressed intent of Congress. In instances where congressional intent is not clear and the statutory language is ambiguous, the courts will likely defer to any reasonable agency interpretation, even if another interpretation is more plausible. Generally, as long as the agency stays within Congress’s delegation of authority, it is free to make policy choices in interpreting a statute, and such interpretations are entitled to deference.31 Here, it must be demonstrated that APHIS’s “use” and “distribution” restrictions are within the bounds of Congress’s delegated authority in the VSTA. The extensive reach of APHIS’s authority seems to stem from the VSTA’s broad grant of authority to the USDA to “make and promulgate from time to time such rules and regulations as may be necessary to prevent the preparation, sale, barter, exchange, or shipment...” of any biological product in order to carry out the VSTA. The VSTA also provides APHIS with broad authority to “issue, suspend, and revoke licenses for the maintenance of establishments ...” that “prepare” biological products intended for use in the treatment of animals. Creating a regulatory and licensing scheme governing the safety, efficacy, purity, and potency of biological products seems to be within this broad congressionally delegated authority. The

After discussions with Creekstone, however, it appears private laboratories may need to become a “laboratory approved by State and Federal animal health officials” as per Notice 04-08. It is still unclear, nonetheless, the exact procedure for obtaining this type of approval. See generally Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). A reviewing court’s inquiry under Chevron is rooted in statutory analysis and focuses on discerning the boundaries of Congress’ delegation of authority to the agency. The Supreme Court recently revisited Chevron in FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000), declaring that the Food & Drug Administration lacks jurisdictional authority to regulate tobacco products. In reaching this determination, the Court discussed the first prong of Chevron, declaring that the proper analysis is to focus not only on the statutory clause, but, rather, to consider the structure, function, and history of all relevant provisions, interpreting a statute “as a symmetrical and coherent regulatory scheme.” Id. at 1294. Upon concluding that Congress “squarely rejected proposals to give the FDA jurisdiction over tobacco,” the Court stated that it was “obliged to defer not to the agency’s expansive construction of the statute, but to Congress’ consistent judgment to deny the FDA this power.” Id. at 1315.
30 31 29

28

Id.

Arent v. Shalala, 70 F.3d 610, 615 (D.C. Cir 1995), citing Chevron, 467 U.S. at 843-45, 865-66.

CRS-8 VSTA and its legislative history do not appear to explicitly address who may “use” a biological product, the extent to which APHIS can deny a license, or the type of restrictions that can be placed on the licenses. Indeed, with only ten short provisions, it could be argued that Congress intended that the VSTA be implemented through a comprehensive regulatory scheme. The USDA regulates the use and distribution of a biological product in 9 C.F.R. §102.5(d), a provision pertaining to the Biological Product License. It states
Where the Administrator determines that the protection of domestic animals or the public health, interest, or safety, or both, necessitates restrictions on the use of a product, the product shall be subject to such additional restrictions as are prescribed on the license. Such restrictions may include, but are not limited to, limits on the distribution of the product or provisions that the biological product is restricted to use by veterinarians, or under the supervision of veterinarians, or both.

On March 17, 2004, the USDA, through APHIS’s Veterinary Services, issued Notice No. 04-08 and invoked this purported power. It placed use and distribution restrictions on Veterinary Biological Product Licenses and Importation Permits for diagnostic test kits (including rapid tests) intended as an aid in the diagnosis of BSE. According to the Notice, such diagnostic test kits can only be sold and used by laboratories approved by state and federal (USDA) animal health officials. Moreover, it requires that potency testing, distribution, and use of the BSE test kits be under the supervision or control of APHIS’s Veterinary Services. In light of the lack of explicit language on “use” restrictions in the VSTA, we discuss arguments that would seem to suggest that §102.5(d) is supported by the VSTA and congressional intent, as well as arguments against such support. Arguments for the Inclusion. The USDA asserts that the VSTA provides the authority for the Department to ensure that veterinary diagnostic test kits are safe and accurate.32 Although the legislative history for the VSTA has been recognized as “extremely sparse” by some courts,33 the authority for APHIS to regulate the design, manufacture, importation, distribution, selling, testing, and labeling of biological products still appears broad. The authority in the VSTA to issue licenses and implement regulations for such things as the “sale,” “exchange,” and “shipment” of biologics could arguably capture a restriction on “use” or “distribution.” Indeed, a restriction on the “sale” of the rapid test kits is exactly what APHIS has done with Notice No. 04-08. By placing a “sale” restriction on the license for test kits, APHIS is also apparently controlling who can use such test kits (although the regulations

32

Scott Kilman, USDA Prohibits Mad-Cow Tests by Outside Labs, Causing Outcry, WALL STREET JOURNAL, March 10, 2004, at A-1. Arguably, the “accuracy” of these test kits can only be assessed in the context of the purpose for which a diagnostic test is being used. Thus, a test that might serve as a “surveillance” tool may be insufficiently accurate to assure a farmer that all animals that test negative are free of BSE. See also USDA Response, at 24. See, e.g., Animal Health Institute v. U.S. Dep’t of Agriculture, 487 F. Supp. 376, 378 (D. Co 1980).
33

CRS-9 allow a restriction on use) and acting within its authority to issue regulations and licenses. Every regulated biological product may be prepared only by a licensed establishment, which must have a Biological Product License for the products it intends to prepare. USDA has reportedly licensed the BSE rapid test kits for “surveillance” purposes only and as mentioned above, restricts the sale and use of such kits to only those laboratories approved by state and federal (USDA) animal health officials. Arguably, using rapid test kits for purposes other than surveillance purposes (i.e., a food safety or a marketing reason) may provide results outside the federally accepted performance parameters for the test. For example, APHIS could argue that the tests which it approved for BSE surveillance were not evaluated to determine if they were reliable enough to support a claim that every individual animal that tests negative is actually negative.34 Overseeing the performance of a diagnostic test kit to try to ensure that it produces adequate and accurate test results every time for the stated purpose may be compatible with APHIS’s regulation of the purity, potency, and efficacy of a biological product. The fact that the USDA intends to keep BSE testing within a federal and state regulatory scheme seems consistent with the congressional recognition in 1985 that a “uniform national standard” would better serve livestock owners, veterinarians, and the American public.35 For example, it arguably could be quite difficult to impose a “uniform national standard” if private parties were allowed to conduct BSE testing. A private company’s economic interests, for one, might significantly influence a company’s compliance with federal regulatory protocol. Along the lines of maintaining a uniform standard, some courts have determined that where safety, efficacy, purity, and potency of biological products are concerned, APHIS, through its comprehensive regulations, has preempted the field.36 While these cases generally address the preemption of state common law tort claims, they arguably demonstrate the breadth of APHIS’s oversight in the field of animal biologics. It is this expansive field of authority that makes it plausible to argue that a regulation over the actual “use” of a rapid test kit would not be manifestly contrary to the VSTA.

With respect to the testing of Chronic Wasting Disease, the BSE analogue in deer and elk, APHIS has argued that no test can be used reliably on individual animals to determine whether that animal is free from CWD. Animal and Plant Health Inspection Service, USDA, Position Paper: Official diagnosis of CWD should be performed exclusively by Federal and State Regulatory agency laboratories, February 2004, available at [http://aphisweb.aphis. usda.gov/lpa/issues/cwd/positioncwdtest.doc].
35

34

See Lynnbrook Farms v. Smithkline Beecham Corp., 79 F.3d 620 (7th Cir. 1996), citing S.Rept. 99-145 at 339. See also USDA Response, at 52-53.

See, e.g., Symens v. SmithKline Beecham Corp. 152 F.3d 1050 (8th Cir. 1998); Lynnbrook Farms v. Smithkline Beecham Corp., 79 F.3d 620 (7th Cir. 1996); Cooper v. United Vaccines, Inc., 117 F. Supp. 2d 864 (E. D. Wis. 2000); Brandt v. The Marshall Animal Clinic and Smithkline Beecham Corp., 540 N.W. 2d 870 (Minn. Ct. App. 1995). These cases basically hold that states are not free to impose requirements, whether through positive enactments or common law tort claims, that are different from or in addition to those requirements of the regulations that have been duly promulgated by APHIS.

36

CRS-10 The restriction on “use” and “distribution” also seems consistent with APHIS’s overarching mission under the VSTA to protect U.S. public and agricultural health by assuring that biologics used in the treatment of animals are pure, safe, potent, and efficacious.37 For instance, a rapid test kit may be “efficacious” for a program in which thousands of targeted cattle are tested to determine nationwide prevalence, but not “efficacious” to support the certification of thousands of specific, individual animals as BSE-free because the tests could have some false-negative or falsepositive results. The restriction on “use” and “distribution” could also be buttressed by the USDA’s objective to preserve domestic and international market confidence in U.S. agricultural commodities. For example, with respect to the testing of Chronic Wasting Disease, the BSE analogue in deer and elk, APHIS has argued that such testing must be performed exclusively by federal and state regulatory agency laboratories in order better maintain international credibility of the U.S. animal health system.38 Arguments Against the Inclusion. While the VSTA and APHIS’s overall mission broadly support its regulation of the “use” of a biological product, it appears the VSTA, its regulations and some legislative history place much more emphasis on the manufacture of a biological product, rather than its intended “use.” Indeed, Creekstone alleges in its lawsuit that the VSTA only authorizes the licensing of establishments that manufacture biological products and not the products themselves.39 With respect to the VSTA regulations in subchapter E of title 9 of the C.F.R., we located only one subpart of one section (§102.5(d)), which restricts the actual “use” of a biological product (except maybe for import permits).40 The regulatory control that APHIS is attempting to accomplish with this one subpart of the licensing regulation could be called into question when viewed comparatively to the developed legal and regulatory framework utilized by the Food and Drug Administration (FDA) and two other agencies in the Department of Health and Human Services (DHHS) to oversee similar activities. The FDA not only regulates human drugs and biological products, but also participates with the Centers for Medicare & Medicaid Services (CMS) and the Centers for Disease Control and Prevention (CDC) to oversee the actual use of

The USDA specifically included a provision for “potency” testing in Notice No. 04-08 for BSE diagnostic test kits. Animal and Plant Health Inspection Service, USDA, Position Paper: Official diagnosis of CWD should be performed exclusively by Federal and State Regulatory agency laboratories, February 2004, available at [http://aphisweb.aphis.usda.gov/lpa/issues/cwd/ positioncwdtest.doc].
39 40 38

37

See Creekstone Lawsuit, at 15.

We did locate in 9 C.F.R. pt. 121 regulations that allow APHIS to monitor the actual possession, use, and transfer of biological agents and toxins. These regulations, however, find their authority in the Agricultural Bioterrorism Protection Act of 2002 (P.L. 107-188, Tit. II, §211) not the VSTA. They were apparently implemented in light of the increased threat of biological warfare and require the registration of any individual or entity that possesses, uses, or transfers specified agents or toxins (including BSE). It is of note that Congress essentially reached outside the VSTA to support regulating the actual use and possession of these biological agents and toxins.

CRS-11 certain tests in laboratories through an elaborate set of certifications and accreditations.41 The FDA is authorized to conduct these activities pursuant to the Clinical Laboratory Improvement Amendments of 1988 (CLIA) (42 U.S.C. §263a). Some may find that the regulatory control that APHIS is attempting to accomplish with §102.5(d) is similar to that of the CLIA, but uses what appears to be a much less developed legal and regulatory framework. Accordingly, there may be some doubt as to the expansiveness of the USDA’s authority to implement a restriction on “use” like §102.5(d) and the extent to which Congress intended APHIS to regulate who actually “uses” a biological product. Aside from the legislative history supporting the 1985 Amendments to the VSTA, there appears to be some support in the early legislative history and language of the VSTA that it was actually intended to regulate the manufacture of biological products. VSTA regulations, for example, may be promulgated to prevent the preparation and sale of worthless, contaminated, dangerous, or harmful biological products. From this language, it may be reasonable to challenge, as Creekstone has done in its lawsuit, the extent to which the USDA can regulate the “use” of properly made and licensed biological products.42 Moreover, during a 1914 Agriculture hearing, Dr. A. M. Farrington, Assistant Chief of the USDA’s Bureau of Animal Industry, stated that with the recent production of hog cholera serums, it was “necessary to supervise the manufacture of these products so that only serums of good quality shall be produced for sale to farmers.”43 He went on to further note that the VSTA was intended to “protect the farmer and stock raiser from improperly made and prepared serums, toxins, and viruses.”44 Indeed, the abundant use of the word “prepare” (as defined in the regulations) in the VSTA and regulations would seem to reiterate Dr. Farrington’s observations. The use of the word “prepare” in licensing requirements and regulations may limit the authority of the USDA over private companies wishing to “use” rapid test kits. The regulations make clear that establishments qualified to “prepare” biological products must have a valid establishment license and at least one valid biological product license for every biologic to be “prepared” in the licensed establishment. According to APHIS regulations, “prepare” means the manufacture or production of a biological product and includes the steps and procedures used in the processing, testing, packaging, labeling, and storing of a biological product. Aside from the
See [http://www.cms.hhs.gov/clia/progdesc.asp]. The CMS is charged with the implementation of the Clinical Laboratory Improvement Amendments of 1988 (CLIA), including laboratory registration, fee collection, surveys, surveyor guidelines and training, enforcement, approvals of PT providers, accrediting organizations and exempt states. The CDC is responsible for the CLIA studies, convening the CLIA Committee, and providing scientific and technical support/consultation to DHHS/CMS. The FDA is responsible for test categorization. Creekstone Lawsuit, at 15. The USDA, however, could claim that a properly made rapid test kit used for an unlicensed purpose may be harmful and dangerous to the national herd. Hearing before the Committee on Agriculture on the Estimates of Appropriations for the Fiscal Year Ending June 30, 1914, (H.R. 28283) 62nd Cong. 24 (1913) (statement of Dr. A. M. Farrington, Asst. Chief Bureau of Animal Industry, Dept. of Agriculture).
44 43 42 41

Id.

CRS-12 imposition of §102.5(d) on the Biological Product License and Importation Permit, it could be argued that a private company wishing to “use” a rapid test kit would be bound only to the extent it can be shown that it is actually selling, bartering, exchanging, shipping or more broadly, “preparing” a regulated rapid test kit. Here however, except for perhaps storing the rapid test kits, it may be difficult to demonstrate that a private company is actually “preparing” a biological product as contemplated by the regulations. Summary. The USDA appears to have broad regulatory authority when it comes to the purity, safety, potency, and efficacy of biological products or more generally, their preparation, manufacture, and sale. Indeed, the overall mission of APHIS, the VSTA and its legislative history, and some case law all could be argued to support the USDA’s extensive authority over the production of biological products and could be more broadly interpreted to support USDA’s oversight over the actual “use” of the rapid test kits. In the alternative, given that the VSTA and its legislative history do not appear to explicitly address restrictions on the actual “use” or “distribution” of a biological product, a court might find that the VSTA is ambiguous and could give deference to a reasonable APHIS interpretation.45 Accordingly, an argument could be made that the “use” and “distribution” restrictions on BSE rapid test kits are apparently within the bounds of Congress’s broad delegations of authority to the USDA to issue licenses and promulgate regulations. Nonetheless, the arguments discussed above also seem to suggest that APHIS may not have the proper legal framework in place to support its restrictions on the “use” and “distribution” of biological products. In addition, it could be argued that the main thrust of the VSTA and its regulations appears more applicable to the preparation, manufacture, and production of biological products rather than restricting their actual “use.” However, if it can be shown that the VSTA does not explicitly make clear Congress’ intention with respect to restrictions on “use” and “distribution,” (i.e., the statute is ambiguous) these arguments may not withstand the deference usually accorded an agency’s reasonable interpretation of the authorizing statute.

The Creekstone Case
On March 23, 2006, Creekstone filed a lawsuit in the District Court for the District of Columbia against the USDA questioning the Department’s authority to (1) regulate rapid test kits; (2) issue regulations that affect the distribution and use of effective rapid test kits; and (3) deny Creekstone the authority to use USDAapproved BSE rapid test kits. Creekstone is seeking, among other things, an injunction enjoining USDA from implementing or enforcing any prohibition on Creekstone acquiring or using USDA-approved BSE rapid test kits for purposes of routinely screening for BSE cattle that Creekstone processes. Should the reviewing

To determine if §102.5(d) is reasonable a court is likely to apply traditional “arbitrary and capricious review” under 5 U.S.C. §706(2)(A) (See analysis under “The Creekstone Case”). We assume for purposes of this analysis that a court would find §102.5(d) reasonable, provided a court also finds that the USDA was acting within its congressionally delegated bounds.

45

CRS-13 court find the USDA’s regulation of rapid test kits incompatible with the VSTA, then Creekstone would likely be granted some or all of the relief it requests. If APHIS is found to have the authority to regulate who actually uses the rapid test kits, the next inquiry a reviewing court is likely to address is whether the agency’s discharge of that authority was reasonable. Such a question falls within the province of traditional “arbitrary and capricious review” under 5 U.S.C. §706(2)(A).46 Generally, the scope of review under the arbitrary and capricious standard is narrow, and a court is unlikely to substitute its judgment for that of an agency.47 Nonetheless, an agency must articulate a satisfactory explanation for its action, including a rational connection between the facts found and the choice made. Normally, an agency rule would be arbitrary and capricious if the agency (1) has relied on factors which Congress has not intended it to consider, (2) entirely failed to consider an important aspect of the problem, (3) offered an explanation for its decision that runs counter to the evidence before the agency, or (4) is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.48 With respect to the Creekstone case, a reviewing court would likely attempt to determine whether APHIS’s decision to deny Creekstone a license to privately test for BSE was arbitrary and capricious in light of the evidence presented and congressional intent. Although we could not confirm exactly which license Creekstone applied for pursuant to federal regulations, we believe Creekstone was attempting to become a “laboratory approved by State and Federal animal health officials” as per Notice 04-08.49 As mentioned above, courts generally provide an agency implementing an authorized regulation a considerable amount of deference; thus, it may be difficult for Creekstone to overcome APHIS’s denial, provided it was based on a rational and satisfactory explanation. Aside from a brief press release on April 9, 2004 that articulates its general rationale for the denial, the USDA has not made public any detailed explanation. Accordingly, we only provide a brief analysis on conclusions that can be drawn from this press release and other supporting data. APHIS seems primarily concerned with the implied consumer safety aspect that 100% testing may produce. It has determined, based on the findings of an international panel of experts, that there is no scientific justification for 100% testing

See Motor Vehicle Mfg. Ass’n v. State Farm Mutual Automobile Ins. Co., 463 U.S. 26 (1983).
47 48 49

46

Id. at 43. Id.

Telephone discussion with Mr. Bill Fielding, C.O.O., Creekstone Farms Premium Beef (May 5, 2004); Telephone discussion with Mr. James Wilson, Quality Control Manager, Creekstone Farms Premium Beef (May 6, 2004). According to Creekstone, it was seeking guidance from the USDA as to which permit or license was necessary for it to conduct BSE rapid tests. USDA apparently did not address which specific license or permit was required, but rather more broadly rejected Creekstone’s request all together.

CRS-14 because the disease does not appear in younger animals.50 APHIS also seems concerned with the implied safety aspect since it believes that no test has been shown to be reliable enough to support use as a food safety test.51 It has also claimed that the chances of a “false positive” for BSE could have “devastating” effects on the U.S. economy and international trade.52 For example, during the USDA’s increase in BSE testing, early reports of two “inconclusives” (i.e., USDA parlance for a rapid test that is not negative for BSE) apparently had a negative impact on cattle markets and consumer confidence.53 Relatedly, for Chronic Wasting Disease, the BSE analogue in deer and elk, APHIS has argued that testing must be performed exclusively by federal and state regulatory agency laboratories. It buttressed its decision with the claim that the international credibility of the U.S. animal health system was largely predicated on having an established set of government labs.54 Arguments centered on APHIS’s role in providing a safe and reliable food supply both domestically and internationally are consistent with the USDA’s overall mission and expertise. Reliance on some of these findings noted above, however, may prove inconsistent with the congressional intent for the VSTA. For instance, the legislative history of the VSTA may not support claimed USDA authority to “maintain domestic and international confidence in U.S. cattle and beef products.”55 Moreover, the USDA’s claim that 100% rapid tests would have an implied food safety impact may also be inconsistent with the purposes of the VSTA, which seems more concerned with protecting the “farmer and stock raiser” and livestock from improperly made biological products. APHIS has also stated that it does not “consider the testing of bovines at slaughter [for BSE] to be ... meaningful in the context of either human or animal health.”56 The lack of an animal health element in APHIS’s reasoning for its rejection of the Creekstone permit would seem to make reliance on the VSTA questionable.57 In its response, the USDA now argues that its policy against private testing does promote animal health.58

USDA Statement by Bill Hawks, Undersecretary for Marketing and Regulatory Programs Regarding a Request by Creekstone for Private BSE Testing, Release No. 0141.04 (April 9, 2004). Animal and Plant Health Inspection Service, USDA, Position Paper: Official diagnosis of CWD should be performed exclusively by Federal and State Regulatory agency laboratories, February 2004, available at [http://aphisweb.aphis.usda.gov/lpa/issues/cwd/ positioncwdtest.doc].
52 53 51

50

Id.

See CRS Report RL32199, Bovine Spongiform Encephalopathy (BSE, or “Mad Cow Disease”): Current and Proposed Safeguards, by Geoffrey S. Becker.
54 55 56

USDA Position Paper, supra note 51. See Creekstone Lawsuit, at 18.

Importation of Whole Cuts of Boneless Beef from Japan, 70 Fed. Reg. 73905, 73,914 (Dec. 12, 2005). See Creekstone Lawsuit, at 18 (arguing that if BSE testing is indeed irrelevant to animal health, then reliance on the VSTA is arbitrary and capricious).
58 57

USDA Response, at 48.

CRS-15 Evidence that demonstrates the APHIS decision contrary to the facts or other USDA practices may also be an issue in court. For example, APHIS has consistently argued that the testing of all animals is not scientifically justified. However, in 2002 and 2003, the USDA reportedly tested over 2,000 head of cattle younger than 30months old for BSE.59 There have also been some reported cases of cattle under the age of 30 months testing positive for BSE in Europe and Japan.60 Creekstone has argued that the testing of younger animals would actually provide a useful negotiating advantage with foreign countries like Japan by disproving the theory that it is necessary to test all animals.61 Evidence might also be introduced showing the extent to which APHIS even considered alternatives or the need for business innovation to keep up with consumer demand. Creekstone may also try to demonstrate that its “marketing” BSE test program enhances the “surveillance” aspect of the USDA’s program and does not have “implied consumer safety aspects.” For example, depending on the scientific evidence presented, it may be plausible to argue that the testing of animals under a “marketing” program does not necessarily entail “treatment” as USDA regulations contemplate or require the same level of scrutiny. Also, with respect to marketing, the USDA apparently certifies many food items for quality assurances that arguably have little to do with food safety (e.g., National Organic Program, Meat Grading and Certification, Beef Export Verification Program, and the Non-Hormone Treated Cattle Program). Summary. The questions raised by the Creekstone lawsuit appear to be ones of first impression. The lack of precedent, coupled with the VSTA’s sparse legislative history and USDA’s inconsistent statements, may make it difficult for the USDA to support some of its claims. Nonetheless, courts generally defer to agency decisions that are rationally supported by the evidence. As such, provided APHIS can demonstrate that each of its reasons for keeping BSE testing within the exclusive purview of federal and state laboratories is rationally justified, a court may uphold APHIS’s decision.

Steve Mitchell, Records contradict USDA’s mad cow decision, UNITED PRESS INTERNATIONAL, Apr. 21, 2004, available at [http://www.upi.com/view.cfm?StoryID= 20040420-052613-8197r]. This report was based on a UPI FOIA request.
60

59

Id. Others, however, believe that the number of cattle under 30 months that test positive for BSE is “statistically insignificant,” and that the two cases in Japan have question marks as to whether they really were positives because both tested positive with rapid tests but negative with the more sensitive IHC test. Testing Debate Misses the Point, CATTLE BUYERS WEEKLY (Apr. 26, 2004). Carole Sugarman, Creekstone completing BSE testing lab despite lack of USDA approval, FOOD CHEMICAL NEWS, Vol. 46, No. 7 (March 29, 2004).
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